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SPD Chairman Oskar Lafontaine Criticizes Globalization (June 25, 1997)

To stem the shift in public opinion towards neoliberalism, SPD Chairman Oskar Lafontaine emphatically warns against lowering the standard of living by cutting welfare benefits and reducing wages in an attempt to make Germany more competitive. Instead, he calls on the international community to make a concerted effort to improve the regulatory structure of the global economy.

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SPD Chairman Oskar Lafontaine Speaks in Berlin on Globalization and Germany as a Location for Business and Industry

The economy has undergone such rapid change and internationalization in recent years that it has assumed a new quality. As a result, there is one key term in contemporary political and economic debates that sparks the imagination but also much dispute. I am referring to the term globalization. This word is connected with great hopes but also with great fear – with hope for growing prosperity and new, secure jobs, but, at the same time, with fear of unemployment and social decline. [ . . . ] This fear is understandable. Nevertheless, I believe that globalization also represents a great opportunity that should be taken advantage of. [ . . . ]

The internationalization of the economy has greatly increased the mobility of goods and services, of knowledge and capital. At its core, globalization means nothing more than the creation of a comprehensive world market. Globalized markets with worldwide mobility of goods and services, of knowledge and capital, are leading to ever harsher competition among businesses. [ . . . ] Added to this is the rapid development of information and communication technologies. [ . . . ] These new information and communication technologies have led to a unified global financial market, which no longer places any restraints whatsoever on investment capital. The sums that move between the world’s stock markets every day are twice as high as the currency reserves of all the central banks. Globalization has expanded the playing field for investment-seeking capital. Choosing a country in which to build new production facilities, research institutes, or administrative centers depends less and less on national origins. [ . . . ]

The political question that now poses itself is: Should globalization be viewed as an opportunity or a risk? And what conclusions should politics draw from this? [ . . . ] The worldwide international division of labor represents a chance to increase the prosperity of all the world’s peoples and to give each its fair share of [the benefits of] economic and technological progress. I am speaking expressly of the opportunities presented by globalization, not what accompanies necessarily or automatically. Whether the opportunities presented by globalization are in fact utilized, and who they ultimately benefit, also depends, in the end, on how economic policy responds to these new developments both on a national and an international level. The problem with the present economic policy is that it does not have a clear concept of competition. Its so-called business-location policy [Standortpolitik] continues to confuse competition among companies with competition among countries. The result is serious economic policy errors. In order to properly determine how economic policy needs to react to globalization, it is necessary to clearly distinguish between these two forms of competition.

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